Two Free In-Stream Advertising Startup Ideas – Part 3: Endorsements

Over the last three days (ending today) I have presented two fantastic startup ideas. In the first post, I profiled the competition (in this case, the in-stream advertising company Ad.ly) and provided a brief introduction to “in stream” marketing. Yesterday and in the post your reading now I presented one of Ad.ly’s shortcomings and the way I would attack it. Today’s Ad.Ly shortcoming, endorsements.

Too many people are talking about in-stream advertising in terms of exposures and click-throughs. This was the right way of looking at billboard ads on websites, but in-stream advertising should be looked at as an endorsement. The reason for this is simple; when something appears in my stream, it’s as if I said it.

In order to define some terms, let’s ignore for a minute that we’re talking about the internet. Let’s pretend we’re an advertiser approaching a more conventional publisher (let’s pick Oprah) for some advertising. With someone like Oprah we have two options:

We could buy advertising during her show and/or on her website. These commercials are what’s known in the business as interrupt marketing. You didn’t flip on Oprah’s show to see our commercial, the goal is to interrupt you from what you’re doing and listen to what I’m saying.

We could pay her to endorse our product. She’d do this during the show. She might for example give all of the members of her audience our product and talk about how much she loves it. This is an endorsement.

When we look at “in-stream” advertising as impressions, click-throughs, etc… We ignore the fact that who delivers our pitch and the consistency of their message is more important then how many people see it. Here’s another example. Let’s say that Tom Cruise and Hines Ward have the same number of followers in Pittsburgh. If all we’re looking at is impressions and click-throughs and demographics then they’d appear to have equal value for Pittsburgh small businesses. However, if both tweet that they love getting their drink on at FatHeads, which do you think will be more effective?

There’s another way that Ad.Ly is ignoring the endorsement concept. On Ad.Ly you buy a single tweet at a time. If I were an advertiser, I’d stop looking right there. I’d want a one year, 75 tweet (approximately 1 every 4 days) contract with my publishers. This is another difference between an interruption and an endorsement. With an interruption ad, you need repetition but it doesn’t matter whether that repetition comes from several different sources. If I see a print advertisement that Trader Joe’s is opening up a new store, then see a TV commercial for it, then see it on a bus stop it’s as effective as seeing it each day for three days during a commercial break on Oprah (maybe more). That’s not what I’m looking for with in-stream advertisement though. If my ad is coming out in Hines Ward’s tweets, I want people to associate my product with his name. This takes repetition from one source, an endorsement.

In case I have to spell it out, here’s the startup idea. Build a marketplace where advertisers can find publishers and form meaningful endorsement contracts. Don’t simply focus on the demographics, find a way to consider whether particular publishers can lead to conversions (not just impressions and click-throughs) for the advertisers they take on.